I'm a Fellow at the Adam Smith Institute in London, a writer here and there on this and that and strangely, one of the global experts on the metal scandium, one of the rare earths. An odd thing to be but someone does have to be such and in this flavour of our universe I am. I have written for The Times, Daily Telegraph, Express, Independent, City AM, Wall Street Journal, Philadelphia Inquirer and online for the ASI, IEA, Social Affairs Unit, Spectator, The Guardian, The Register and Techcentralstation. I've also ghosted pieces for several UK politicians in many of the UK papers, including the Daily Sport.

Yes, Of Course Cyprus Should Leave The Euro. Why Do You Ask?

This doesn’t happen very often, that my views coincide with those of a Nobel Laureate (the usual flaw being in my ideas of course, not those of the NL) so worth my crowing when they do. For Paul Krugman has offered this advice as to what Cyprus should do:

So here it is: yes, Cyprus should leave the euro. Now.

The reasoning is that Cyprus might, indeed should, stay in the euro if it is going to save its banking system and avoid a massive deflation of the economy by doing so. However, the banking system is already crocked and there is going to be a massive deflation of the economy. So why not then break free of the euro and have that deflation as a currency devaluation rather than an internal devaluation of wages? Such would be a great deal less painful for everyone involved and would almost certainly finish a great deal sooner too.

As Krugman goes on to point out:

What’s the path forward? Cyprus needs to have a tourist boom, plus a rapid growth of other exports — my guess would be agriculture as a driver, although I don’t know much about it. The obvious way to get there is through a large devaluation; yes, in the end this probably does come down to cheap deals that attract lots of British package tours.

It wouldn’t actually be the British so much. Actually, it would be more Russians. There was indeed a time when us Brits were wedded to the all inclusive package holiday but they’re rather past now. To a great extent their existence was because of currency controls on taking cash out of the UK. It was almost impossible to get permission to take out money on your own. So you couldn’t book your own hotels, pay for your own meals etc. Thus the package holiday where all except booze was paid for in sterling at home.

These days it’s actually the Russians who go for the all inclusive holiday package. A devaluation in Cyprus would indeed increase this traffic. And it would indeed be an aid to economic recovery. But there is a certain irony in that the solution to economic woes from losing the rich Russians is to cater to the poorer Russians out on the lash in the sun. But that is the way it would probably work out.

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